With many sources lamenting the takeover of the markets by the robots I see too many traders crying "woe is me" and playing the victim. It doesn't have to be like that. The bots are not the big bogeyman hiding under your bed as the mainstream media would lead you to believe. In fact once you wake up to the fact that it is now easier than ever to jump on the coattails of the robots and let them make you money, you'll have a change in perceptions. The smart momentum trader doesn't care about the fundamentals or direction that any particular stock trades in. Any stock at any time in any direction is thus fair game. They become just vehicles to be used and then discarded when their usefulness expires.
When the robots take over, prices seem to move faster than ever before but that doesn't mean that the classic chart patterns don't repeat themselves. They do and thats because the programming is done by humans based on classic technical analysis and momentum. When the bots discover a stock in play, they make it really in play.
If the prices are getting jacked up or hammered down and the bids/asks are flying by, go with the flow. I like to play very liquid .01 spread stocks so I don't get screwed by the spread. I'm not in this game for fractions of pennies and will gladly give up some pennies in order to have the opportunity to get dollars.
I follow what I now call "The will of the bots". My style has been changing or evolving you could say to keep with the trend longer and not to jump on every directional change. I see evidence the bots pile on a stock that shows movement. I don't care if the initial movement was caused by the bots or by another entity wanting to accumulate or disburse shares. The important thing is to crash their party and drink some of their free booze.
Look at some plays from today. Classic technical analysis chart patterns.
1st chart NZ buying pullback
2nd chart NZ sell as it stalls
3rd chart AKAM short as it stalls
4th chart AKAM cover on huge volume candle
2 comments:
You've really adapted well Scott. A 1.5-3pt move used to take us 6-12min. Remember SKF in 2008 and a 40pt mega move in less than an hour.
Different times = different styles.
Good stuff. Your approach is def. the best approach.
I stopped trading stocks and ETFs a few months ago. My futures account should go live this week. I'm taking it slowly. I have no profits to play around with. Only my savings.
I teach guitar part time and I'm starting this month as a substitute at a middle school. We have 170 substitute teachers in my 28,000 population town. Most of them are laid off full time teachers who are just looking for work. California..what a great state! *pukes*
I really don't like to be a pessimist, but Carlin pretty much nails it imo: http://www.youtube.com/watch?v=hYIC0eZYEtI&feature=player_embedded
interesting tie in here
http://www.businessinsider.com/greg-tusar-high-frequency-trading-2010-9?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+clusterstock+(ClusterStock)
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